Вы находитесь на странице: 1из 23

CHAPTER 92

BILLS OF EXCHANGE
Ordinances AN ORDINANCE TO DECLARE THE LAW RELATING TO BILLS OF EXCHANGE, CHEQUES,
Nos. 25 of 1927, BANKERS' DRAFTS. AND PROMISSORY NOTES.
30 of 1930,
Acts
Nos. 5 of 1955,
25 of 1957,
30 of 1961.
[1st March, 1928.]
PARTI " holder " means the payee or indorsee of
a bill or note who is in possession
PRELIMINARY of it, or the bearer thereof;
" indorsement " means an indorsement
Short title. 1. This Ordinance may be cited as the
completed by delivery;
Bills of Exchange Ordinance.
Interpretation. 2. In this Ordinance, unless the context " issue " means the first delivery of a bill
otherwise requires or note, complete in form, to a
person who takes it as a holder;
" acceptance" means an acceptance
completed by delivery or
" value " means valuable consideration ;
notification;

" action " includes a claim in reconvention " written" includes printed, and
and set-off; " writing " includes print.

"banker" includes a body of persons,


whether incorporated or not, who PART II
carry on the business of banking;
BILLS OF EXCHANGE
" bank holiday " means a day appointed
FORM AND INTERPRETATION
to be a bank holiday by or under
the powers contained in any 3. (1) A bill of exchange is an Bill of
enactment for the time being in unconditional order in writing, addressed by exchange
force; defined.
one person to another, signed by the person
giving it, requiring the person to whom it is
" bankrupt" includes any person whose addressed to pay on demand, or at a fixed
estate is vested in a trustee or -or determinable future time, a sum certain
assignee under the law for the time
in money to or to the order of a specified
being in force relating to insolvency
person, or to bearer.
or bankruptcy;
(2) An instrument which does not
" bearer " means the person in possession comply with these conditions, or which
of a bill or note which is payable to orders any act to be done in addition to the
bearer; payment of money, is not a bill of exchange.
" bill" means bill of exchange, and (3) An order to pay out of a particular Particular
" note " means promissory note; fund is not unconditional within the fund.
meaning of this section ; but an unqualified
" delivery " means transfer of possession, order to pay, coupled with (a) an indication
actual or constructive, from one of a particular fund out of which the drawee
person to another; is to reimburse himself or a particular

IV/162
BILLS OF EXCHANGE [Cap.92
account to be debited with the amount, or one or some of several payees. A bill may
{b) a statement of the transaction which also be made payable to the holder of an
gives rise to the bill, is unconditional. office for the time being.
Date, place, (4) A bill is not invalid by reason (3) Where the payee is a fictitious or non-
and value. existing person the bill may be treated as
(a) that it is not dated ;
payable to bearer.
(b) that it does not specify the value 8. (1) When a 'bill 'contains words What bills are
given, or that any value has been prohibiting transfer, or indicating an negotiable.
given therefor ; intention that it should not be transferable,
(c) that it does not specify the place it is valid as between the parties thereto, but
where it is drawn or the place where is not negotiable,
it is payable. (2) A negotiable bill may be payable
Inland and 4. (1) An inland bill is a bill which is, or either to order or to bearer.
foreign bills. on the face of it purports to be (3) A bill is payable to bearer which is
(a) both drawn and payable within Sri expressed to be so payable, or on which the
Lanka,or only or last indorsement is an indorsement
in blank.
(b) drawn within Sri Lanka upon some
person resident therein. (4) A bill is payable to order which is
expressed to be so payable, or which is
Any other bill is a foreign bill. expressed to be payable to a particular
person, and does not contain words
(2) Unless the contrary appear on the prohibiting transfer or indicating an
face of the bill the holder may treat it as an intention that it should not be transferable.
inland bill.
(5) Where a bill, either originally or by
Effect where 5. (1) A bill may be drawn payable to, indorsement, is expressed to be payable to
different or to the order of, the drawer ; or it may be
parties to bill the order of a specified person, and not to
are the same drawn payable to, or to the order of, the him or his order, it is nevertheless payable
person. drawee. to him or his order at his option.
Drawer and (2) Where in a bill drawer and drawee are 9. (1) The sum payable by a bill is a Sum payable.
drawee same the same person, or where the drawee is a sum certain within the meaning of this
person or firm.
fictitious person or a person not having Ordinance, although it is required to be
capacity to contract, the holder may treat paid
the instrument, at his option, either as a bill
of exchange or as a promissory note. (a) with interest;

Address to 6. (1) The drawee must be named or (b) by stated instalments ;


drawee. otherwise indicated in a bill with reasonable (c) by stated instalments, with a
certainty. provision that upon default in
(2) A bill may be addressed to two or payment of any instalment the
more drawees whether they are partners or whole shall become due ;
not, but an order addressed to two drawees (d) according to an indicated rate of
in the alternative, or to two or more exchange, or according to a rate of
drawees in succession, is not a bill of exchange to be ascertained as
exchange. directed by the bill.
Certainty 7. (1) Where a bill is not payable to (2) Where the sum payable is expressed
required as to bearer, the payee must be named or in words and also in figures, and there is a
payee.
otherwise indicated therein with reasonable discrepancy between the two, the sum
certainty. denoted by the words is the amount
payable.
(2) A bill may be made payable to two
or more payees jointly, or it may be made (3) Where a bill is expressed to be
payable in the alternative to one of two, or payable with interest, unless the instrument

IV/163
Cap.92] BILLS OF EXCHANGE

otherwise provides, interest runs from the Provided that


date of the bill, and if the bill is undated,
from the issue thereof. (i) where the holder in good faith and by
mistake inserts a wrong date, and
(4) Where. a bill is expressed to be (ii) in every case where a wrong date is
payable with interest, unless the instrument inserted, if the bill subsequently comes into
otherwise provides, the interest shall be at the hands of a holder in due course the bill
the rate of mneper centum per annum : shall not be avoided thereby, but shall
Provided that the amount recoverable on operate and be payable as if the date so
account of interest or arrears of interest inserted had been the true date.
shall in no case exceed the principal. 13. (1) Where a bill or an acceptance Presumption as
Bill payable on 10. (1) A bill is payable on demand or any indorsement on a bill is dated, the to date being
, ,, , , , , , true date.
demand. date shall, unless the contrary be proved, be
(a) which is expressed to be payable on deemed to be the true date of the drawing,
demand, or at sight, or on acceptance, or indorsement, as the case may
presentation ; or be.
(b) in which no time for payment is (2) A bill is not invalid by reason only
expressed. that it is antedated or postdated, or that it
bears date on a Sunday.
14. Where a bill is not payable on Computation
(2) Where a bill is accepted or indorsed
demand, the day on which it falls due is oftlmeof
when it is overdue, it shall, as regards the payment.
determined as follows :
acceptor who so accepts, or any indorser
who so indorses it, be deemed a bill payable (1) Three days, called days of grace, are,
on demand. in every case where the bill itself
does not otherwise provide, added
Bill payable at 11. (1) A bill is payable at a to the time of payment as fixed by
a future time. determinable future time within the meaning the bill, and the bill is due and
of this Ordinance which is expressed to be payable on the last day of grace :
payable
* Provided that
(a) at a fixed period after date or sight ; (a) when the last day of grace falls
(b) on or at a fixed period after the on a day appointed to be a
occurrence of a specified event public holiday by or under
which is certain to happen, though any law for the time being in
the time of happening may be force, the bill is, except in the
uncertain. case hereinafter provided for,
due and payable on the
preceding business day ;
(2) An instrument expressed to be (b) when the last day of grace is a
payable on a contingency is not a bill, and bank holiday, or when the last
the happening of the event does not cure the day of grace is a Sunday and
defect. the second day of grace is a
bank holiday, the bill is due
Omission of 12. Where a bill expressed to be payable
date in bill and payable on the succeeding
at a fixed period after date is issued
payable after business day.
date, or undated, or where the acceptance of a bill
acceptance payable at a fixed period after sight is (2) Where a bill is payable at a fixed
after sight. undated, any holder may insert therein the period after date, after sight, or
true date of issue or acceptance, and the bill after the happening of a specified
shall be payable accordingly : event, the time of payment is

* The changes made to the proviso to section 14 (1) have been necessitated by the provisions of section 3 of the
Holidays Act (No. 29 of 1971) reproduced in this Edition as Chapter 364 which materially differs from the
now repealed Holidays Ordinance. No. 1 of 1928, reproduced as Chapter 135 in Volume III of the 1938 Edition of
the Legislative Enactments.

IV/164
BILLS OF EX CHANGE [Cap.92
determined by excluding the day (b) when it is overdue, or after it has
from which the time is to begin to been dishonoured by a previous
run and by including the day of refusal to accept, or by
payment. non-payment ;
(3) Where a bill is payable at a fixed (c) when a bill payable after sight is
period after sight, the time begins to dishonoured by non-acceptance,
run from the date of the acceptance and the drawee subsequently
if the bill be accepted, and from the accepts it, the holder, in the absence
date of noting or protest if the bill of any different agreement, is
be noted or protested for non- entitled to have the bill accepted as
acceptance, or for non-delivery. of the date of first presentment to
the drawee for acceptance.
[ 2, 30 of (4) The term " Shoes ** " u>rrfib *' or
1961.] " month " in a bill means calendar 19. (1) An acceptance is either General and
month. qualified
(a) general, or acceptances.
Case of need. 15. The drawer of a bill and any
indorser may .insert therein the name of a (b) qualified.
person to whom the holder may resort in
case of need, that is to say, in case the bill is (2) A general acceptance assents without
dishonoured by non-acceptance or non- qualification to the order of the drawer. A
payment. Such person is called the referee in qualified acceptance in express terms varies
case of need. It is in the option of the holder the effect of the bill as drawn.
to resort to the referee in case of need or (3) In particular an acceptance is
not, as he may think fit. qualified which is
Special 16. The drawer of a 'bill and any (a) conditional, that is to say, which
stipulations by indorser, may insert therein an express
drawer or makes payment by the acceptor
indorser stipulation dependent on the fulfilment of a
restricting condition therein stated ;
liability. (a) negativing or limiting his own
liability to the holder ; (b) partial, that is to say, an acceptance
to pay part only of the amount for
' ( b ) waiving as regards himself some or
which the bill is drawn ;
all of the holder's duties.
(c) local, that is to say, an acceptance to
Definition and 17. (1) The acceptance of a bill is the pay only at a particular specified
requisites of signification by the drawee of his assent to
acceptance. place ;
the order of the drawer.
(d) qualified as to time ;
(2) An acceptance is invalid unless it
complies with the following conditions, (e) the acceptance of some one or more
namely : of the drawees, but not of all.
(4) An acceptance to pay at a particular
(a) It must be written on the bill and be place is a general acceptance, unless it
signed by the drawee. The mere
expressly states that the bill is to be paid
signature of the drawee without there only, and not elsewhere.
additional words is sufficient.
20. (1) Where a simple signature on a inchoate
(b) It must not express that the drawee blank stamped paper is delivered by the instruments o
, , . , . , . . blank
will perform his promise by any signer in order that it may be converted into signatures
other means than the payment of a bill, it operates as a prima facie authority
money. to fill it up as a complete bill for any
amount the stamp will cover, using the
Time for 18. A bill may be accepted signature for that of the drawer, or the
acceptance. acceptor, or an indorser ; and, in like
(a) before it has been signed by the manner, when a bill is wanting in any
drawer, or while otherwise incomplete ; material particular, the person in

IV/165
BILLS OF EXCHANGE [Cap.92
possession of it has a prima facie authority CAPACITY AND AUTHORITY OF PARTIES
to fill up the omission in any way he thinks
fit. 22. (I) Capacity to incur liability as a Capacity of
party to a bill is coextensive with capacity to Parties.
(2) In order that any such instrument contract.
when completed may be enforceable against
any person who beame a party thereto prior (2) Where such capacity is to be
to its completion, it must be filled up within determined by the law of Sri Lanka, it shall
a reasonable time, and strictly in accordance be determined by Roman-Dutch law as
with the authority given. Reasonable time administered in Sri Lanka subject to the
for this purpose is a question of fact; provisions of any enactment affecting that
law.
Provided that if any such instrument after
completion is negotiated to a holder in due (3) Provided that nothing in this section
course, it shall be valid and effectual for all shall enable a corporation to make itself
purposes in his hands, and he may enforce it liable as drawer, acceptor, or indorser of a
as if it had been filled up within a bill, unless it is competent to it so to do
reasonable time and strictly in accordance under the law for the time being in force
with the authority given. relating to corporations.

Delivery to 21. (1) Every contract on a bill, (4) Where a bill is drawn or indorsed by
complete whether it be the drawer's, the acceptor's, or a minor or corporation having no capacity
contract. or power to incur liability on a bill, the
an indorser's, is incomplete and revocable
until delivery of the instrument in order to drawing or indorsement entitles the holder
give effect thereto ; to receive payment of the bill, and to
enforce it against any other party thereto.
Provided that where an acceptance is
written on a bill. and the drawee gives 23. No person is liable as drawer. Signature
notice to or according to the directions of indorser, or acceptor of a bill who has not esential to
, .,' . liability.
the person entitled to the bill that he has signed it as such :
accepted it, the acceptance then becomes
complete and irrevocable. Provided that
(a) where a person signs a bill in a trade
(2) As between immediate parties, and
or assumed name, he is liable
as. regards a remote party other than a
thereon as if he had signed it in his
holder in due course, the delivery
own name ;
(a) in order to be effectual must be (b) the signature of the name of a firm is
made either by or under the equivalent to the signature by the
authority of the party drawing, person so signing of the names of
accepting, or indorsing, as the case all persons liable as partners in that
may be ; firm.
(b) may be shown to have been
24. Subject to the provisions of this Forged or
conditional or for a special purpose Ordinance, where a signature on a bill is "unauthorized"
only, and not for the purpose of
forged or placed thereon without the signature
transferring the property in the bill.
authority of the person whose signature it
But if the bill be in the hands of a holder purports to be, the forged or unauthorized
in due course a valid delivery of the bill by signature is wholly inoperative, and no right
all parties prior to him so as to make them to retain the bill or to give a discharge
liable to him is conclusively presumed. therefor or to enforce payment thereof
against any party thereto can be acquired
(3) Where a bill is no longer in the through or under that signature, unless the
possession of a party who has signed it as party against whom it is sought to retain or
drawer, acceptor, or indorser, a valid and enforce payment of the bill is precluded
unconditional delivery by him is presumed from setting up the forgery or want of
until the contrary is proved. authority :

IV/166
BILLS OF EXCHANGE [Cap.92
Provided that nothing in this section shall receiving value therefor, and for the purpose
affect the ratification of an unauthorized of lending his name to some other person.
signature not amounting to a forgery.
(2) An accommodation party is liable on
Procuration 25. A signature by procuration operates the bill to a holder for value; and it is
signatures. as notice that the agent has but a limited immaterial whether, when such holder took
authority to sign, and the principal is only the bill, he knew such party to be an
bound by such signature if the agent in so accommodation party or not.
signing was acting within the actual limits of
his authority. 29. (1) A holder in due course is a Holder in due
Persons signing 26. (1) Where a person signs a bill as holder who has taken a bill, complete and course-
as agent or in drawer, indorser, or acceptor, and adds regular on the face of it, under the following
representative conditions, namely:
capacity. words to his signature, indicating that he
signs for or on behalf of a principal, or in a
representative character, he is not personally (a) that he became the holder of it before
liable thereon; but the mere addition to his it was overdue, and without notice
signature of words describing him as an that it had been previously
agent, or as filling a representative dishonoured, if such was the fact;
character, does not exempt him from (b) that he took the bill in good faith and
personal liability. for value, and that at the time the
(2) In determining whether a signature on bill was negotiated to him he had
a bill is that of the principal or that of the no notice of any defect in the title
agent by whose hand it is written, the of the person who negotiated it,
construction most favourable to the validity (2) In particular the title of a person who
of the instrument shall be adopted. negotiates a bill is defective within the
meaning of this Ordinance when he
THE CONSIDERATION FOR A BILL obtained the bill, or the acceptance thereof,
Value defined. 27. (1) Valuable consideration for a bill by fraud, duress, or force and fear, or other
may be constituted by unlawful means, or for an illegal
consideration, or when he negotiates it in
(a) any consideration which by the law of breach of faith, or under such circumstances
England is sufficient to support a as amount to a fraud.
simple contract; (3) A holder (whether for value or not)
(b) an antecedent debt or liability. Such a who derives his title to a bill through a
debt or liability is deemed valuable holder in due course, and who is not himself
consideration whether the bill is a party to any fraud or illegality affecting it,
payable on demand or at a future has all the rights of that holder in due
time. course as regards the acceptor and all
parties to the bill prior to that holder.
(2) Where value has at any time been 30. (1) Every party whose signature Presumption of
given for a bill, the holder is deemed to be a appears on a bill is prima facie deemed to value and good
holder for value as regards the acceptor and have become a party thereto for value. faith
all parties to the bill who became parties
prior to such time. (2) Every holder of a bill is prima facie
deemed to be a holder in due course ; but if
(3) Where the holder of a bill has a lien in an action on a bill it is admitted or
on it, arising either from contract or by proved that the acceptance, issue, or
implication of law, he is deemed to be a* subsequent negotiation of the bill is affected
holder for value to the extent of the sum for with fraud, duress, or force and fear, or
which he has a lien. illegality, the burden of proof is shifted,
unless and until the holder proves that,
Accommodation 28. (1) An accommodation party to a subsequent to the alleged fraud or illegality,
bill or party, bill is a person who has signed a bill asvalue has in good faith been given for the
drawer, acceptor, or indorser, without bill.

IV/167
Cap.92] BILLS OF EXCHANGE
NEGOTIATION OF BILLS (4) Where, in a bill payable to order, the
payee or indorsee is wrongly
Negotiation 31. (1) A bill is negotiated when it is designated, or his name is misspelt,
defined, transferred from one person to another in he may indorse the bill as therein
such a manner as to constitute the transferee described, adding if he think fit,
the holder of the bill. his proper signature.
(2) A bill payable to bearer is negotiated (5) Where there are two or more
by delivery. indorsements on a bill, each
(3) A bill payable to order is negotiated indorsement is deemed to have been
by the indorsement of the holder completed made in the order in which it
by delivery. appears on the bill until the
contrary is proved.
(4) Where the holder of a bill payable to
his order transfers it for value without (6) An indorsement may be made in
indorsing it, the transfer gives the transferee blank or special. It may also
such title as the transferor had in the bill contain terms making it restrictive.
and the transferee in addition acquires the 33. Where a bill purports to be indorsed Conditional
right to have the indorsement of the conditionally the condition may be indorsement.
transferor. disregarded by the payer, and payment to
(5) Where any person is under obligation the indorsee is valid whether the condition
to indorse a bill in a representative capacity, has been fulfilled or not.
he may indorse the bill in such terms as to
negative personal liability. 34. (1) An indorsement in blank indorsement in
specifies no indorsee, and a bill so indorsed blank-
Requisites of a 32. An indorsement in order to operate becomes payable to bearer.
valid as a negotiation must comply with the
indorsement, r ,, , . , (2) A special indorsement specifies the
following conditions, namely :
person to whom, or to whose order, the bill
(1) It must be written on the bill itself is to be payable.
and be signed by the indorser. The *
simple signature of the indorser on (3) The provisions of this Ordinance
the bill, without additional words, relating to a payee apply with the necessary
is sufficient. modifications to an indorsee under a special
indorsement.
An indorsement written on an allonge, or (4) When a bill has been indorsed in
on a " copy " of a bill issued or blank, any holder may convert the blank
negotiated in a country where indorsement into a special indorsement by
" copies " are recognized, is deemed writing above the indorsees signature a
to be written on the bill itself, direction to pay the bill to or to the order of
himself or some other person.
(2) It must be an indorsement of the
entire bill. A partial indorsement, 35. (1) An indorsement is restrictive Restrictive
that is to say, an indorsement which which prohibits the further negotiation of indorsement,
purports to transfer to the indorsee the bill, or which expresses that it is a mere
a part only of the amount payable, authority to deal with the bill as thereby
or which purports to transfer the directed and not a transfer of the ownership
bill to two or more indorsees thereof, as, for example, if a bill be [3,30 of
severally, does not operate as a endorsed 1961.]
negotiation of the bill.

(3) Where a bill is payable to the order of " Pay D only " ;
two or more payees or indorsees
who are not partners all must or
indorse, unless the one indorsing
has authority to indorse for the others. " Pay D for the account of X " ;

IV/168
BILLS OF EXCHANGE [Cap.92
entitled to enforce payment of the bill
or against any intervening party to whom he
was previously liable.
"Pay D or order for
coilection ". 38. The rights and powers of the holder Rights of the
(2) A restrictive indorsement gives the of a bill are as follows : holder-
indorsee the right to receive payment of the
(a) he may sue on the bill in his own
bill and to sue any party thereto that his
name;
indorser could have sued, but gives him no
power to transfer his rights as indorsee (b) where he is a holder in due course,
unless it expressly authorize him to do so. he holds the bill free from any
defect of title of prior parties, as
(3) Where a restrictive indorsement well as from mere personal defences
authorizes further transfer, all subsequent available to prior parties among
indorsees take the bill with the same rights themselves, and may enforce
and subject to the same liabilities as the first payment against all parties liable on
indorsee under the restrictive indorsement. the bill;
How long bill 36. (!) Where a bill is negotiable in its (c) where his title is defective
continues origin it continues to be negotiable until it
negotiable.
has been (i) if he negotiates the bill to a
holder in due course, that
(a) restrictively indorsed, or holder obtains a good and
(b) discharged by payment or otherwise, complete title to the bill, and

(2) Where an overdue bill is negotiated, it (ii) if he obtains payment of the


can only be negotiated subject to any defect bill, the person who pays him
of title affecting it at its maturity, and in due course gets a valid
thenceforward no person who takes it can discharge for the bill.
acquire or give a better title than that which GENERAL DUTIES OF THE HOLDER
the person from whom he took it had.
39. (1) Where a bill is payable after When
(3) A bill payable on demand' is deemed sight, presentment for acceptance is presentment
to be overdue within the meaning and for for acceptance
necessary in order to fix the maturity of the is necessary.
the purposes of this section, when it appears instrument.
on the face of it to have been in circulation
for an unreasonable length of time. What is (2) Where a bill expressly stipulates that
an unreasonable length of time, for this it shall be presented for acceptance, or
purpose is a question of fact. where a, bill is drawn payable elsewhere than
at the residence or place of business of the
(4) Except where an indorsement bears drawee, it must be presented for acceptance
date after the maturity of the bill, every before it can be presented for payment.
negotiation is prima facie deemed to have
been effected before the bill was overdue. (3) In no other case is presentment for
acceptance necessary in order to render
(5) Where a bill which is not overdue has liable any party to the bill.
been dishonoured, any person who takes it
with notice of the dishonour takes it subject (4) Where the holder of a bill, drawn
to any defect of title attaching thereto at the payable elsewhere than at the place of
time of dishonour, but nothing in this business or residence of the drawee, has not
subsection shall affect the rights of a holder time, with the exercise of reasonable
in due course. diligence, to present the bill for acceptance
before presenting it for payment on the day
Negotiation of 37. Where a bill is negotiated back to that it falls due, the delay caused by
bill to party the drawer, or to a prior indorser, or to the presenting the bill for acceptance before
already liable
thereon. acceptor, such party may, subject to the presenting it for payment is excused, and
provisions of this Ordinance, reissue and does not discharge the drawer and
further negotiate the bill, but he is not indorsers.

IV/169
Cap.92] BILLS OF EXCHANGE
Time for .40. (I) Subject to the provisions of this person or a person not having
presenting bill Ordinance, when a bill payable after sight is capacity to contract by bill;
payable after
sight. negotiated, the holder must either present it
for acceptance or negotiate it within a (b) where, after the exercise of
reasonable time. reasonable diligence, such
presentment cannot be effected ;
(2) If he do not do so, the drawer and all
indorsers prior to that holder are (c) where, although the presentment has
discharged. been irregular, acceptance has been
refused on some other ground.
(3) In determining what is a reasonable
time within the meaning of this section, (3) The fact that the holder has reason to
regard shall be had to the nature of the bill, believe that the bill, on presentment, will be
the usage of the trade with respect to similar dishonoured does not excuse presentment.
bills, and the facts of the particular case.
42. (1) When a bill is duly presented for Non-
acceptance, and is not accepted within the acceptance
Rules 41. (1) A bill is duly presented for after
regarding acceptance which is presented in accordance customary time, the person presenting it customary
presentment must treat it as dishonoured by non- time.
for acceptance, with the following rules;
and excuses for acceptance. If he do not, the holder shall
non-presentment. (a) the presentment must be made by or lose his right of recourse against the drawer
on behalf of the holder to the and indorsers.
drawee or to some person
authorized to accept or refuse (2) Where the day on which a bill should
acceptance on his behalf at a be accepted is a bank holiday, the bill shall
reasonable hour on a business day be accepted on the succeeding business day.
and before the bit! is overdue ;
43. (1) A bill is dishonoured by Dishonour by
(b) where a bill is addressed to two or non-acceptance non-acceptance
more drawees, who are not and its
consequences.
partners, presentment must be (a) when it is duly presented for
made to them all, unless one has acceptance, and such an acceptance
authority to accept for all, then as is prescribed by this Ordinance is
presentment may be made to him refused or cannot be obtained ; or
only;
(b) when presentment for acceptance is
(c) where the drawee is dead excused and the bill is not accepted.
presentment may be made to his
personal representative; (2) Subject to the provisions of this
Ordinance, when a bill is dishonoured by
(d) where the drawee is insolvent or
non-acceptance, an immediate right of
bankrupt, presentment may be
recourse against the drawer and indorsers
made to him or to his assignee or
accrues to the holder, and no presentment
trustee;
for payment is necessary,
(e) where authorized by agreement or
usage, a presentment through the 44. (1) The holder of a bill may refuse Duties as to
post office is sufficient; to take a qualified acceptance, and if he qualified
acceptances.
does not obtain an unqualified acceptance
(f) where the day on which a bill should may treat the bill as dishonoured by
be presented is a bank holiday, the non-acceptance.
bill shall be presented on the
succeeding business day. * (2) Where a qualified acceptance is taken,
and the drawer or an indorser has not
(2) Presentment in accordance with these
rules is excused and a bill may be treated as expressly or impliedly authorized the holder
to take a qualified acceptance, or does not
dishonoured by non-acceptance
subsequently assent thereto, such drawer or
- (ff) where the drawee is dead, insolvent, indorser is discharged from his liability on
or bankrupt, or is a fictitious the bill.

IV/170
BILLS OF EXCHANGE [Cap.92
The provisions of this subsection do not (a) where a place of payment is
apply to a partial acceptance, whereof due specified in the bill and the
notice has been given. Where a foreign bill bill is there presented;
has been accepted as to part, it must be
protested as to the balance, (b) where no place of payment is
specified, but the address of
(3) When the drawer or indorser of a bill the drawee or acceptor is
receives notice of a qualified acceptance, given in the bill, and the bill is
and does not within a reasonable time there presented;
express his dissent to the holder, he shall be
deemed to have assented thereto. (c) where no place of payment is
specified, and no address
Presentment 45. Subject to the provisions of this given, and the bill is presented
for payment. Ordinance a bill must be duly presented for at the drawee's or acceptor's
payment. If it be not so presented the place of business, if known,
drawer and indorsers shall be discharged. and if not, at his ordinary
residence if known;
A bill is duly presented for payment
(d) in any other case, if presented to
which is presented in accordance with the
the drawee or acceptor,
following rules:
wherever he can be found, or
if presented at his last known
(1) Where the bill is not payable' on
place of business or residence.
demand, presentment must be made
on the day it falls due. (5) Where a bill is presented at the proper
place, and after the exercise of
(2) Where the bill is payable on demand, reasonable diligence no person
then, subject to the provisions of authorized to pay or refuse
this Ordinance, presentment must payment can be found there, no
be made within a reasonable time further presentment to the drawee
after its issue in order to render the or acceptor is required.
drawer liable, and within a
reasonable time ' after its (6) Where a bill is drawn upon or
indorsement, in order to render the accepted by two or more persons
indorser liable. who are not partners, and no place
of payment is specified,
In determining what is a reasonable time, presentment must be made to them
regard shall be had to the nature of all.
the bill, the usage of trade with
regard to similar bills, and the facts (7) Where the drawee or acceptor of a bill
of the particular case. is dead, and no place of payment is
specified, presentment must be
(3) Presentment must be made by the made to a personal representative,.
holder or by some person if such there be, and with the
authorized to receive payment on exercise of reasonable diligence he
his behalf at a reasonable hour on a can be found.
business day, at the proper place as (8) Where authorized by agreement or
hereinafter defined, either to- the usage a presentment through the
person designated by the bill as post office is sufficient.
payer, or to some person authorized
to pay or refuse payment on his 46. (1) Delay in making presentment for Excuses for
behalf if with the exercise of payment is excused when the delay is caused delay or non-
presentment
reasonable diligence such person by circumstances beyond the control of the for payment.
can there be found- holder, and not imputable to his default,
misconduct, or negligence. When the cause
(4) A bill is presented at the proper of delay ceases to operate presentment must
place be made with reasonable diligence.

13- IV/171
Cap.92] BILLS OF EXCHANGE
(2) Presentment for payment is dispensed Provided that
with
(a) where a bill is dishonoured by non-
(a) where, after the exercise of reasonable acceptance, and notice of dishonour
diligence, presentment, as required is not given, the rights of a holder
by this Ordinance, cannot be in due course subsequently to the
effected ; omission, shall not be prejudiced by
the omission;
(b) where the drawee is a fictitious (b) where a bill is dishonoured by non-
person; acceptance and due notice of
dishonour is given, it shall not be
(c) as regards the drawer, where the necessary to give notice of a
drawee or acceptor is not bound, as subsequent dishonour by non-
between himself and the drawer, to payment unless the bill shall in the
accept or pay the bill, and the meantime have been accepted.
drawer has no reason to believe that
the bill would be paid if presented ; 49. Notice of dishonour in order to be Rules as to
valid and effectual must be given in notice of
(d) as regards an indorser, where the bill accordance with the following rules: dishonour
was accepted or made for the
accommodation of that indorser, (1) The notice must be given by or on
and he has no reason to expect that behalf of the holder, or by or on
the bill would be paid if presented ; behalf of an indorser who, at the
time of giving it, is himself liable on
(e) by waiver of presentment, express or the bill.
implied. (2) Notice of dishonour may be given by
an agent, either in his own name or
(3) The fact that the holder has reason to in the name of any party entitled to
believe that the bill will, on presentment, be give notice, whether that party be
dishonoured, does not dispense with the his principal or not.
necessity for presentment.
(3) Where the notice is given by or on
behalf of the holder, it enures for
Dishonour by 47. (1) A bill is dishonoured by the benefit of all subsequent holders
non-payment, non-payment and all prior indorsers who-have a
right of recourse against the party
(a) when it is duly presented for payment to whom it is given.
and payment is refused or cannot
be obtained, or (4) Where notice is given by or on behalf
of an indorser entitled to give notice
(b) when presentment is excused and the as hereinbefore provided, it enures
bill is overdue and unpaid. for the benefit of the holder and all
indorsers subsequent to the party to
(2) Subject to the provisions of this whom notice is given.
Ordinance, when a bill is dishonoured by (5) The notice may be given in writing or
non-payment, an immediate right of by personal communication, and
recourse against the drawer and indorsers may be given in any terms which
accrues to the holder. sufficiently identify the bill, and
intimate that the bill has been
Notice of 48. Subject to the provisions of this dishonoured by non-acceptance or
dishonour and Ordinance when a bill has been
effect of non-payment. '
non-notice. dishonoured by non-acceptance or by non-
payment, notice of dishonour must be given (6) The return of a dishonoured bill to
to the drawer and each indorser, and any the drawer or an indorser is, in
drawer or indorser to whom such notice is point of form, deemed a sufficient
not given is discharged : notice of dishonour.

IV/172
BILLS OF EXCHANGE [Cap.92
(7) A written notice need not be signed, be a post at a convenient hour
and an insufficient written notice on that day, and if there be no
may be supplemented and validated such post on that day then by
by verbal communication. A the next post thereafter.
misdescription of the bill shall not
vitiate the notice unless the party to (13) Where a bill when dishonoured is in
whom the notice is given is in fact the hands of an agent, he may
misled thereby, either himself give notice to the
panics liable on the bill or he may
(8) Where notice of dishonour is required give notice to his principal. If he
to be given to any person, it may be give notice to his principal, he must
given either to the party himself, or do so within the same time as if he
to his agent in that behalf. were the holder, and the principal
upon receipt of such notice has
(9) When the drawer or indorser is dead, himself the same time for giving
and the party giving notice knows notice as if the agent had been an
it, the notice must be given to a independent holder.
personal representative if such there
be and with the exercise of (14) Where a party to a bill receives due
reasonable diligence he can be notice of dishonour, he has after the
found. receipt of such notice the same
period of time for giving notice to
(10) Where the drawer or indorser is antecedent parties that the holder
insolvent or bankrupt, notice may has after the dishonour.
be given either to the party himself
or to the assignee or trustee. (15) Where a notice of dishonour is duly
addressed and posted, the sender is
(11) Where there are two or more deemed to have given due notice of
drawers or indorsers who are not dishonour, notwithstanding any
partners, notice must be given to miscarriage by the post office.
each of them, unless one of them
has authority to receive such notice
for the others. 50. (1) Delay in giving notice of Excuses for
dishonour is excused where the delay is delay in giving
notice of
(12) The notice may by given as soon as caused by circumstances beyond the control dishonour,
the bill is dishonoured, and must be of the party giving notice, and not
given within a reasonable time imputable to his default, misconduct, or
thereafter. negligence. When the cause of delay ceases
to operate the notice must be given with
In the absence of special circumstances reasonable diligence.
notice is not deemed to have been
given within a reasonable time, (2) Notice of dishonour is dispensed
unless with

(a) where the person giving and the


person to receive notice reside (a) when, after the exercise of reasonable
in the same place, the notice is diligence, notice as required by this
given or sent off in time to Ordinance cannot be given to or
reach the latter on the day does not reach the drawer or
after the dishonour of the bill; y indorser sought to be charged ;

(b) where the person giving and the (b) by waiver express or implied. Notice
person to receive notice reside of dishonour may be waived before
in different places, the notice is the time of giving notice has
sent off on the day after the arrived, or after the omission to
dishonour of the bill, if there give due notice;

IV/173
Cap. 92] BILLS OF EXCHANGE
(c) as regards the drawer in the following a foreign bill, protest thereof in case of
cases, namely dishonour is unnecessary.

(i) where, drawer and drawee are the (3) A bill which has been protested for
same person, non-acceptance may be subsequently
protested for non-payment.
(ii) where the drawee is a fictitious (4) Subject to the provisions of this
person or a person not having Ordinance, when a bill is noted or protested,
capacity to contract, it may be noted on the day of its dishonour
(iii) where the drawer is the person and must be noted not later than the next
to whom the bill is presented succeeding business day. When a bill has
for payment, been duly noted, the protest may be
subsequently extended as of the date of the
(iv) where the drawee or acceptor is noting.
as between himself and the
(5) Where the acceptor of a bill becomes
drawer under no obligation to
bankrupt or insolvent or suspends payment
accept or pay the bill,
before it matures, the holder may cause the
bill to be protested for better security
(v) where the-- drawer has
against the drawer and indorsers.
countermanded payment;
(6) A bill must be protested at the place
(d) as regards the indorser in the where it is dishonoured :
following cases, namely
Provided that
(i) where the drawee is a fictitious (a) when a bill is presented through the
person or a person not having post office, and returned by post
capacity to contract, and the dishonoured, it may be protested at
indorser was aware of the fact the place to which it is returned and
at the time he indorsed the on the day of its return if received
bill, during business hours, and if not
received during business hours, then
(ii) where the indorser is the person . not later than the next business
to whom the bill is presented day;
for payment,
(b) when a bill drawn payable at the
(iii) where the bill was accepted or place of business or residence of
made for his accommodation. some person other than the drawee
has been dishonoured by non-
Noting inland 51. (1) Where an inland bill has been acceptance, it must be protested for
bill. dishonoured it may, if the holder think fit, non-payment at the place where it is
be noted for non-acceptance or non- expressed to be payable, and no
payment, as the case may be; but it shall further presentment for payment to,
not be necessary to note or protest any such or demand on, the drawee is
bill in order to preserve the recourse against necessary.
the drawer or indorser. (7) A protest must contain a copy of the
bill, and must be signed by the notary
(2) Where a foreign bill, appearing on the making it, and must specify
face of it to be such, has been dishonoured
by non-acceptance it must be duly protested (a) the person at whose request the bill is
for non-acceptance, and where such a bill protested;
which has not been previously dishonoured (b) the place and date of protest, the
by non-acceptance, is dishonoured by non- cause or reason for protesting the
payment, it must be duly protested for non- bill, the demand made, and the
payment. If it be not so protested the answer given, if any, or the fact that
drawer and indorsers are discharged. Where the drawee or acceptor could not be
a bill does not appear on the face of it to be found.

IV/174
BILLS OF EXCHANGE [Cap. 92
(8) Where a bill is lost or destroyed, or is (a) the existence of the drawer, the
wrongly detained from the person entitled genuineness of his signature,
to hold it, protest may be made on a copy and his capacity and authority
or written particulars thereof. to draw the bill;

(9) Protest is dispensed with by any


circumstance which would dispense with (b) in the case of a bill payable to
notice of dishonour. Delay in noting or drawer's order, the then
protesting is excused when the delay is capacity of the drawer to
caused by circumstances beyond the control indorse, but not the
of the holder, and not imputable to his. genuineness or validity of his
default, misconduct, or negligence. When indorsement;
the cause of,delay ceases to operate the bill
must be noted or protested with reasonable (c) in the case of a bill payable to
diligence. the order of a third person,
the existence of the payee and
Duties of 52. (1) When a bill is accepted generally his then capacity to indorse,
holder as presentment for payment is not necessary in but not the genuineness or
regards drawee , , , . . r 1.1
or acceptor, order to render the acceptor liable. validity of his indorsement.

(2) When by the terms of a qualified 55. (1) The drawer of a bill by drawing it Liability of
acceptance presentment for payment is drawer.
required, the acceptor, in the absence of an (a) engages that on due presentment it
express stipulation to that effect, is not shall be accepted and paid
discharged by the omission to present the according to its tenor, and that if it
bill for payment on the day that it matures. be dishonoured he will compensate
the holder or any indorser who is
(3) In order to render the acceptor of a compelled to pay it, provided that
bill liable it is not necessary to protest it, or the requisite proceedings on
that notice of dishonour should be given to dishonour be duly taken;
him.

(4) Where the holder of a bill presents it (b) is precluded'from denying to a holder
for payment, he shall exhibit the bill to the in due course the existence of the
person from whom he demands payment, payee and his then capacity to
and when a bill is paid the holder shall indorse.
forthwith deliver it up to the party paying it.

(2) The indorser of a bill, by indorsing it-


LIABILITIES OF PARTIES

Funds in hands 53. A bill, of itself, does not operate as (a) engages that on due presentment it
of drawee. an assignment of funds in the hands of the shall be accepted and paid
drawee available for the payment thereof, according to its tenor, and that if it
and the drawee of a bill who does not accept be dishonoured he will compensate
the holder or a subsequent indorser
as required by this Ordinance is not liable
on the instrument. who is compelled to pay it,
provided that the requisite
proceedings on dishonour be duly
Liability of 54. The acceptor of a bill, by accepting
acceptor. it-
taken;

(1) engages that he will pay it according (b) is precluded from denying to a holder
to the tenor of his acceptance ; in due course the genuineness and
regularity in all respects of the
(2) is precluded from denying to a holder drawer's signature and all previous
in due course indorsements

IV/175
Cap. 92] BILLS OF EX CHANGE
(c) is precluded from denying to his 58. (1) Where the holder of a bill Transferor by
immediate or a subsequent indorsee payable to bearer negotiates it by delivery delivery and
-,, . - J - . 1 . ,, , transferee.
that the bill was at the time of his without indorsing it, he is called a
indorsement a valid and subsisting " transferor by delivery ".
bill, and that he had then a good
title thereto. (2) A transferor by delivery is not liable
on the instrument.
Stranger 56. Where a person signs a bill
signing bill otherwise than as drawer or acceptor, he (3) A transferor by delivery who
liable as
indorser. thereby incurs the liabilities of an indorser negotiates a bill thereby warrants to his
to a holder in due course. immediate transferee being a holder for
value that the bill is what it purports to be,
Measure of 57. Where a bill is dishonoured, the that he has a right to transfer it, and that at
damages measure of damages, which shall be deemed the time of transfer he is not aware of any
against parties
to dishonoured to be liquidated damages, shall be as fact which renders it valueless.
bill. follows:
DISCHARGES
(1) The holder may recover from any
party liable on the bill, and the
drawer who has been compelled to 59. (1) A bill is discharged by payment Payment in
pay the bill may recover from the in due course by or on behalf of the drawee due course-
acceptor, and an indorser who has or acceptor.
been compelled to pay the bill may
recover from the acceptor or from " Payment in due course " means payment
the drawer, or from a prior made at or after the maturity of the bill to
indorser the holder thereof in good faith and without
notice that his title to the bill is defective.
(a) the amount of the bill;
(2) Subject to the provisions hereinafter
(b) interest thereon from the time contained, when a bill is paid by the drawer
of presentment for payment if
or an indorser it is not discharged ; but
the bill is payable on demand,
and from the maturity of the (a) where a bill payable to, or to the
bill in any other case ; order of, a third party is paid by the
(c) the expenses of noting, or, when drawer, the drawer may enforce
protest is necessary, and the payment thereof against the
protest has been extended, the acceptor, but may not re-issue the
expenses of protest. bill;
(2) In the case of a bill which has been (b) where a bill is paid by an indorser, or
dishonoured abroad, in lieu of the where a bill payable to drawer's
above damages, the holder may order is paid by the drawer, the
recover from the drawer, or an party paying it is remitted to his
indorser, and the drawer or an former rights as regards the
indorser who has been compelled to acceptor or antecedent parties, and
pay the bill may recover from any he may, if he thinks fit, strike
party liable to him the amount of out his own and subsequent
the re-exchange with interest indorsements, and again negotiate
thereon until the time of payment. the bill.
(3) Where by this Ordinance interest may
be recovered as damages, such (3) Where an accommodation bill is paid
interest may, if justice require it, be in due course by the party accommodated
withheld wholly or in part, and the bill is discharged.
where a bill is expressed to be
payable with interest at a given rate, 60. (1) When a bill payable to order on Banker paying
demand is drawn on a banker, and the demand draft
interest as damages may or may not whereon
be given at the same rate as interest banker on whom it is drawn pays the bill in indorsement is
proper. good faith and in the ordinary course of forged.

IV/176
BILLS OF EXCHANGE [Cap.92
business, it is not incumbent on the banker 64, (1) Where a bill or acceptance is Alteration of
to show that the indorsement of the payee materially altered without the assent of all bill.
or any subsequent indorsement was made parties liable on the bill, the bill is avoided',
by or under the authority of the person except as against a party who has himself
whose indorsement it purports to be, and made, authorized, or assented to the
the banker is deemed to have paid the bill in alteration, and subsequent indorsers;
due course, although such indorsement has
been forged or made without authority. Provided that where a bill has been
materially altered, but the alteration is not
[2.25 of (2) The provisions of subsection (1) shall apparent, and the bill is in the hands of a
1957.] apply to a banker's draft as if that draft holder in due course, such holder may avail
were a bill referred to in that subsection. himself of the bill as if it had not been
altered; and may enforce payment of it
In this subsection " banker's draft" has according to its original tenor.
the same meaning as in section 84.
(2) In particular the following alterations
Acceptor the 61. When the acceptor of a bill is or are material, namely, any alteration of the
holder at becomes the holder of it at or after its
maturity. date, the sum payable, the time of payment,
maturity, in his own right, the bill is the place of payment, and, where a bill has
discharged. been accepted generally, the addition of a
place of payment without the acceptor's
Express 62. (1) When the holder of a bill at assent.
waiver or or after its maturity absolutely and
renunciation.
unconditionally renounces his rights against ACCEPTANCE AND PAYMENT FOR HONOUR
the acceptor the bill is discharged.
65. (1) Where a bill of exchange has Acceptance for
The renunciation must be in writing, been protested for dishonour by non- honour supra'
unless the bill is delivered up to the acceptance, or protested for better security, protest.
acceptor. and is not overdue, any person, not being a
party already liable thereon, may, with the
(2) The liabilities of any party to a bill consent of the holder, intervene and accept
may in like manner be renounced by the the bill supra protest, for the honour of any
holder before, at, or after its maturity, but party liable thereon, or for the honour of
nothing in this section shall affect the rights the person for whose account the bill is
of a holder in due course without notice of drawn.
the renunciation.
(2) A bill may be accepted for honour for
Cancellation. 63. (1) Where a bill is intentionally part only of the sum for which it is drawn.
cancelled by the holder or his agent, and the
cancellation is apparent thereon, the bill is (3) An acceptance for honour supra
discharged. protest in order to be valid must
(2) In like manner any party liable on a
bill may be discharged by the intentional (a) be written on the bill, and indicate
cancellation of his signature by the holder that it is an acceptance for honour;
or his agent. In such case any indorser who
would have had a right of recourse against (b) be signed by the acceptor for honour.
the party whose signature is cancelled is also
discharged. (4) Where an acceptance for honour does
not expressly state for whose honour it is
(3) A cancellation made unintentionally, made, it is deemed to be an acceptance for
or under a mistake, or without the authority the honour of the drawer.
of the holder, is inoperative; but where a
bill or any signature thereon appears to (5) Where a bill payable after sight is
have been cancelled, the burden of proof lies accepted for honour, its maturity is
on the party who alleges that the calculated from the date of the noting for
cancellation was made unintentionally, or non-acceptance, and not from the date of
under a mistake, or without authority. the acceptance for honour,

IV/177
Cap. 92] BILLS OF EXCHANGE
Liability of 66. (1) The acceptor for honour of a bill (3) Payment for honour supra protest, in
acceptor for by accepting it engages that he will, on due order to operate as such and not as a mere
honour.
presentment, pay the bill according to the voluntary payment, must be attested by a
tenor of his acceptance, if it is not paid by notarial act of honour which may be
the drawee, provided it has been duly appended to the protest or form an
presented for payment, and protested for extension of it.
non-payment, and that he receives notice of
these facts- (4) The notarial act of honour must be
founded on a declaration made by the payer
(2) The acceptor for honour is liable to for honour, or his agent in that behalf,
the holder and to all parties to the bill declaring his intention to pay the bill for
subsequent to the party for whose honour honour, and for whose honour he pays.
he has accepted.
(5) Where a bill has been paid for
honour, all parties subsequent to the party
Presentment to 67. (1) Where a dishonoured bill has for whose honour it is paid are discharged,
acceptor for been accepted for honour supra protest, or but the payer for honour is subrogated for,
honour.
contains a reference in case of need, it must and succeeds to both the rights and duties
be protested for non-payment before it is of, the holder as regards the party for whose
presented for payment to the acceptor for honour he pays, and all parties liable to that
honour, or referee in case of need. party.

(2) Where the address of the acceptor for (6) The payer for honour on paying to
honour is in the same place where the bill is the holder the amount of the bill and the
protested for non-payment, the bill must be notarial expenses incidental to its dishonour
presented to him not later than the day is entitled to receive both the bill itself and
following its maturity; "and where the the protest. If the holder do not on demand
address of the acceptor for honour is in deliver them up he shall be liable to the
some place other than the place where it was payer for honour in damages.
protested for non-payment, the bill must be
forwarded not later than the day following (7) Where the holder of a bill refuses to
its maturity for presentment to him. receive payment supra protest he shall lose
his right of recourse against any party who
would have been discharged by such
(3) Delay in presentment or non-
payment.
presentment is excused by any circumstance
which would excuse delay in presentment
for payment or . non-presentment for
LOST INSTRUMENTS
payment.
69. Where a bill has been lost before it is Holder's right
(4) When a bill of exchange is overdue, the person who was the holder of it to duplicate of
dishonoured by the acceptor for honour it , , . , . r
may apply to the drawer to give him lost bill.
must be protested for non-payment by him. another bill of the same tenor, giving
security to the drawer if required to
Payment for 68. (1) Where a bill has been protested indemnify him against all persons whatever
Honour supra for non-payment, any person may intervene
protest. in case the bill alleged to have been lost
and pay it supra protest for the honour of shall be found again.
any party liable thereon, or for the honour
of the person for whose account the bill is If the drawer on request as aforesaid
drawn. refuses to give such duplicate bill, he may be
compelled to do so.
(2) Where two or more persons offer to
pay a bill.for the honour of different parties, 70. In any action or proceeding upon a Action on lost
the person whose payment will discharge bill, the court or a judge may order that the bi11-
most parties to the bill shall have the loss of the instrument shall not be set up,
preference. provided an indemnity be given to the

IV/178
BILLS OF EXCHANGE [Cap.92
satisfaction of the court or judge against the the validity as regards requisites in
claims of any other person upon the form of the supervening contracts,
instrument in question. such as acceptance, or indorsement,
or acceptance supra protest, is
BILL IN A SET determined by the law of the place
where such contract was made:
Rules as to 71. (1) Where a bill is drawn in a set,
sets. each part of the set being numbered, and
Provided that
containing a reference to the other parts, the
whole of the parts constitute one bill.
(a) where a bill is issued outside Sri
(2)Where the holder of a set indorses two Lanka it is not invalid by
or more parts to different persons, he is reason only that it is not
liable on every such part, and every indorser stamped in accordance with
subsequent to him is liable on the part he the law of the place of issue ;
has himself indorsed as if the said parts were
separate bills. (b) where a bill issued outside Sri
Lanka conforms, as regards
(3) Where two or more parts of a set are requisites in form, to the law
negotiated to different holders in due of Sri Lanka, it may, for the
course, the holder whose title first accrues is purpose of enforcing payment
as between such holders deemed the true thereof, be treated as valid as
owner of the bill; but nothing in this between all persons who
subsection shall affect the rights of a person negotiate, hold, or become
who in due course accepts or pays the part parties to it in Sri Lanka.
first presented to him.
(2) Subject to the provisions of this
(4) The acceptance may be written on any Ordinance, the interpretation of the
part, and it must be written on one part drawing, indorsement, acceptance,
only. or acceptance supra protest of a
bill, is determined by the law of the
If the drawee accepts more than one part,
place where such contract is made:
and such accepted parts get into the hands
of different holders in due course, he is
Provided that where an inland bill is
'liable on every such part as if it were a
indorsed in a foreign country the
separate bill.
indorsement shall as regards the
(5) When the acceptor of a bill drawn in payer be interpreted according to
a set pays it without requiring the part the law of Sri Lanka.
bearing his acceptance to be delivered up to
(3) The duties of the holder with respect
him, and that part at maturity is
to presentment for acceptance or
outstanding in the hands of a holder in due
payment and the necessity for or
course, he is liable to the holder thereof.
sufficiency of a protest or notice of
(6) Subject to the preceding rules, where dishonour or otherwise, are
any one part of a bill drawn in a set is determined by the law of the place
discharged by payment or otherwise the where the act is done or the bill is
whole bill is discharged. dishonoured.
(4) Where a bill is drawn out of but
CONFLICT OF LAWS payable In Sri Lanka, and the sum
Rules where 72. Where a bill drawn in one country is payable is not expressed in the
laws conflict, negotiated, accepted, or payable in another, * currency of Sri Lanka, the amount
the rights, duties, and liabilities of the shall, in the absence of some
parties thereto are determined as follows ; express stipulation, be calculated
according to the rate of exchange
(1) The validity of a bill as regards for sight drafts at the place of
requisites in form is determined by payment on the day the bill is
the law of the place of issue, and payable.

IV/179
Cap. 92] BILLS OF EXCHANGE
(5) Where a bill is drawn in one country (a) countermand of payment;
and is payable in another, the due
date thereof is determined (b) notice of the customer's death.
according to the law of the place
where it is payable, CROSSED CHEQUES

76. (1) Where a cheque bears across its General and


PART III face an addition of two parallel transverse special
crossings
lines, either with or without the words defined.
CHEQUES ON A BANKER [4, 30 of
"not negotiable", that 1961.]
Cheque 73. A cheque is a bill of exchange drawn addition constitutes a crossing and the
defined. on a banker payable on demand. cheque is crossed generally.
(2) Where a cheque bears across its face [ 4, 30 of
Except as otherwise provided in this Part, an addition of the name of a banker, either 1961.1
the provisions of this Ordinance applicable with or without the words
to a bill of exchange payable on demand " not negotiable", that addition constitutes a
apply to a cheque. crossing, and the cheque is crossed specially
and to that banker.
Presentment 74. Subject to the provisions of this
of cheque Ordinance
for payment. 77. (1) A cheque may be crossed Crossing by
(1) Where a cheque is not presented for generally or specially by the drawer, drawer or
6 -' ' after issue.
payment within a reasonable time
of its issue, and the drawer or the (2) Where a cheque is uncrossed, the
person on whose account it is holder may cross it generally or specially.
drawn had the right at the time of
such presentment as between him (3) Where a cheque is crossed generally,
and the banker to have the cheque the holder may cross it specially.
paid and suffers actual damage
through the delay, he is discharged (4) Where a cheque is crossed generally [ 5,30 of
to the extent of such damage, that or specially, the holder may add the words 1961-]
" not negotiable ".
is to say, to the extent to which
such drawer or person is a creditor
of such banker to a larger amount
than he would have been" had such (5) Where a cheque is crossed specially,
cheque been paid. the banker to whom it is crossed may again
cross it specially to another banker for
(2) In determining what is a reasonable collection.
time regard shall be had to the
(6) Where an uncrossed cheque or a
nature of the instrument, the usage
cheque crossed generally is sent to a banker
of trade and of bankers, and the
for collection, he may cross it specially to
facts of the particular case.
himself.
(3) The holder of such cheque as to which
78. A crossing authorized by this Crossing a
such drawer or person is discharged material part
Ordinance is a material part of the cheque ;
shall be a creditor, in lieu of such of cheque.
it shall not be lawful for any person to
drawer or person, of such banker to
obliterate, or, except as authorized by this
the extent of such discharge, and
Ordinance, to add to or alter the crossing.
entitled to recover the amount from
him.
79. (1) Where a cheque is crossed Duties of
specially to more than one banker, except banker -as to
crossed
Revocation of 75. The duty and authority of a banker when crossed to an agent for collection cheque.
banker's to pay a cheque drawn on him by his being a banker, the banker on whom it is
authority.
customer are determined by drawn shall refuse payment thereof.

IV/180
BILLS OF EXCHANGE [Cap. 92
(2) Where the banker on whom a cheque specially to himself, and the customer has
is drawn which is so crossed nevertheless no title or a defective title thereto, the
pays the same, or pays a cheque crossed banker shall not incur any liability to the
generally otherwise than to a banker, or if true owner of the cheque by reason only of
crossed specially otherwise than to the having received such payment.
banker to whom it is crossed, or his agent
for collection being a banker, he is liable to (2) A banker receives payment of a
the true owner of the cheque for any loss he crossed cheque for a customer within the
may sustain owing to the cheque having meaning of this section notwithstanding that
been so paid: he credits his customer's account with the
amount of the cheque before receiving
Provided that where a cheque is presented payment thereof.
for payment which does not at the time of
presentment appear to be crossed, or to
have had a crossing which has been 83. Sections 76 to 82, both inclusive, of Extension of
this Ordinance shall extend to any sections 76 to
obliterated, or to have been added to or 82 to certain
altered otherwise than as authorized by this document issued by a customer of any drafts on
Ordinance, the banker paying the cheque in banker, and intended to enable any person bankers.
good faith and without negligence shall not or body corporate to obtain payment from
be responsible or incur any liability, nor such banker of the sum mentioned in such
shall the payment be questioned by reason document, and shall so extend in like
of the cheque having been crossed, or of the manner as if the said document were a
crossing having been obliterated or having cheque:
been added to or altered otherwise than as
authorized by this Ordinance, and of Provided that nothing in this Ordinance
payment having been made otherwise than shall be deemed to render any such
to a banker or to the banker to whom the document a negotiable instrument.
cheque is or was crossed, or to his agent for
collection being a banker, as the case may For the purpose of this section, the
be. Deputy Secretary to the Treasury shall be
deemed to be a banker, and the public
Protection to 80. Where the banker on whom a officers drawing on him shall be deemed
banker and crossed cheque is drawn, in good faith and customers.
drawer where
cheque is without negligence pays it, if crossed
crossed. generally, to a banker, and if crossed 84. Sections 76 to 82, both inclusive, of Application
specially, to the banker to whom it is this Ordinance shall apply to a banker's of sections
76 to 82 to
crossed, or his agent for collection, being a draft as if that draft were a cheque. drafts drawn
banker, the banker paying the cheque, and, by a bank on
if the cheque has come into the hands of the For the purposes of this section, the itself.
payee, the drawer, shall respectively be expression " banker's draft" means a draft
entitled to the same rights and be placed in payable on demand drawn by or on behalf
the same position as if payment of the of a bank upon itself, whether payable at
cheque had been made to the true owner the head office or some other office of the
thereof. bank.
Effect of 81. Where a person takes a crossed
crossing with PART IV
words cheque which bears on it the words
" not " not negotiable ", he shall
negotiable"
on holder.11 not have and shall not be capable of giving ' PROMISSORY NOTES
[6.30 of a better title to the cheque than that which
1961.] 85. (1) A promissory note is an Promissory
the person from whom he took it had.
unconditional promise in writing made by note defined.
one person to another signed by the maker,
engaging to pay, on demand or at a fixed or .
Protection to 82. (1) Where a banker in good faith determinable future time, a sum certain in
collecting and without negligence receives payment for money, to,- or to the order of, a specified
banker.
a customer of a cheque crossed generally or person or to bearer.

IV/181
Cap. 92] BILLS OF EXCHANGE
(2) An instrument in the form of a note (2) Presentment for payment is necessary
payable to maker's order is not a note in order to render the indorser of a note
within the meaning of this section, unless liable.
and until it is indorsed by the maker.
(3) Where a note is in the body of it made
(3) A note is not invalid by reason only
payable at a particular place, presentment at
that it contains also a pledge of collateral
that place is necessary in order to render an
security with authority to sell or dispose
indorser liable; but when a place of
thereof.
payment is indicated by way of
memorandum only, presentment at that
(4) A note which is, or on the face of it
place is sufficient to render the indorser
purports to be, both made and payable
liable, but a presentment to the maker
within Sri Lanka is an inland note. Any
elsewhere, if sufficient in other respects,
other note is a foreign note.
shall also suffice.
Delivery 86. A promissory note is inchoate and
necessary. incomplete until delivery thereof to the
90. The maker of a promissory note by Liability of
payee or bearer.
making it maker-

Joint and 87. (1) A promissory note may be made (a) engages that he will pay it according
several notes. by two or more makers, and they may be to its tenor;
liable thereon jointly, or jointly and
severally, according to its tenor. (b) is precluded from denying to a holder
in due course the existence of the
(2) Where a note runs " I promise to payee and his then capacity to
pay " and is signed by two or more persons, indorse.
it is deemed to be their joint and several
note.
91. (1) Subject to the provisions in this Application of
Part. and except as by this section provided,
.
part II to
Note payable 88. (1) Where a note payable on the provisions of this Ordinance relating to notes
on demand. demand has been indorsed, it must be bills of exchange apply, with the necessary
presented for payment within a reasonable modifications, to promissory notes.
time of the indorsement. If it be not so
presented the indorser is discharged.
(2) In applying those provisions the
(2) In determining what is a reasonable maker of a note shall be deemed to
time, regard shall be had to the nature of correspond with the acceptor of a bill, and
the instrument, the usage of trade, and the the first indorser of a note shall be deemed
facts of the particular case. to correspond with the drawer of an
accepted bill payable to drawer's order.
(3) Where a note payable on demand is
negotiated, it is not deemed to be overdue,. (3) The following provisions as to bills do
for the purpose of affecting the holder with
not apply to notes, namely, provisions
defects of title of which he had no notice, by
relating to
reason that it appears that a reasonable time
for presenting it for payment has elapsed (a) presentment for acceptance;
since its issue.
(b) acceptance;
Presentment of 89. (1) Where a promissory note is in
note for the body of it made payable at a particular (c) acceptance supra protest;
payment to
render maker place, it must be presented for payment at
liable. that place in order to render the maker (d) bills in a set.
liable. In any other case, presentment for
payment is not necessary in order to render (4) Where a foreign note is dishonoured,
the maker liable. protest thereof is unnecessary.

IV/182
BILLS OF EXCHANGE [Cap. 92
PART V 96. Where a dishonoured bill or note is Protest when
authorized or required to be protested, and notary not
the services of a notary cannot be obtained accessible.
SUPPLEMENTARY
at the place where the bill is dishonoured,
any householder or substantial resident of -
Good faith. 92. A thing is deemed to be done in the place may, in the presence of two
good faith within the meaning of this witnesses, give a certificate, signed by them,
Ordinance, where it is in fact done honestly, attesting the dishonour of the bill, and the
whether it is done negligently or not. certificate shall in all respects operate as if it
were a formal protest of the bill.

Signature. 93. (1) Where, by this Ordinance, any The form given in the Schedule to this
instrument or writing is required to be Ordinance may be used with necessary
signed by any person, it is not necessary that modifications, and if used shall be sufficient.
he should sign it with his own hand, but it is
sufficient if his signature is written thereon
by some other person by or under his
97. The provisions of this Ordinance as Dividend
authority.
to crossed cheques shall apply to a warrant warrants may
be crossed.
for payment of dividend.
(2) In the case of a corporation, where,
by this Ordinance, any instrument or
writing is required to be signed, it is
98. (1) The rules in insolvency or Savings.
sufficient if the instrument or writing be
bankruptcy relating to bills of exchange,
sealed with the corporate seal.
promissory notes, and cheques shall
continue to apply thereto, notwithstanding
But nothing in this section shall be
anything in this Ordinance contained.
construed as requiring the bill or note of a
corporation to be under seal.
(2) The rules of the common law of
England, including the law merchant,
Compulation 94. Where, by this Ordinance, the time save in so far as they are inconsistent with.
of time. limited for doing any act or thing is less the express provisions of this Ordinance, or
than three days, in reckoning time, non- any other enactment for the time being in
business days are excluded. force, shall apply to bills of exchange, '
promissory notes, and cheques.
" Non-business days " for the purposes of
this Ordinance mean (3) Nothing in this Ordinance or in any
repeal effected thereby shall affect
(a) a bank holiday;
(a) any law or enactment for the time
(b) a day appointed to be a public being in force relating to stamps or
holiday by or under any law for the the revenue;
time being in force.
(b) the provisions of the Companies
Any other day is a business day. Ordinance,* or enactments
amending it, or any enactment
relating to joint stock banks or
When noting 95. For the purposes of this Ordinance, companies;
equivalent to where a bill or note is required to be
protest. (c) the provisions relating to promissory
protested within a specified time or before
some further proceeding is taken, it is notes contained in the Money
sufficient that the bill has been noted for Lending Ordinance;
protest before the expiration of the specified
time or the taking of the proceeding; and (d) the validity of any usage relating to
the formal protest may be extended at any dividend warrants or the
time thereafter as of the date of the noting. indorsement thereof.
* Repealed and replaced by the Companies Act, No. 17 of 1982.
IV/183
Cap. 92] BILLS OF EXCHANGE
SCHEDULE

[Section 96.] FORM OF PROTEST WHICH MAY BE USED WHEN THE SERVICES OF A NOTARY
CANNOT BE OBTAINED

Know all men that I. A. B. (householder), o f . . . . . . . . . . . . . . . . . . . in the district o f . . . . . . . . . . . . . . . . . . . i n Sri


Lanka, at the request of C. D., there being no notary public available, did on t h e . . . . . . . . . . . . . . . . . -day
o f . . . . . . . . . . . . . . . . . . . 19...., a t . . . . . . . . . . . . . . . . . . . demand payment (or acceptance) of the bill of exchange
hereunder written, from E. F; to which demand he made answer (state answer, if any), wherefore I now in the
presence of G. H. and ./. K. do protest the said bill of exchange.

(Signed) A.B.

G. H. ]
Witnesses.
J.K.]

MB.The bill itself should be annexed, or a copy of the bill and all that is written thereon should be
underwritten.

IV/184